Prime Minister Stephen Harper makes an announcement on an all-weather road linking Canada's Arctic coast to the south for the first time, in Inuvik, Northwest Territories, Wednesday, Jan.8, 2014. THE CANADIAN PRESS/Jonathan Hayward

INUVIK, N.W.T. - Prime Minister Stephen Harper broke ceremonial ground Wednesday on a new all-weather highway to the coast of the Arctic Ocean, building on an idea that stretches all the way back to the John Diefenbaker era.

Initial work is nearly finished on the 140-kilometre gravel highway between Inuvik and Tuktoyaktuk and the entire project is scheduled to be complete by 2018.

The link, which will hook up to the Dempster Highway running through the Yukon, is expected to deliver many economic benefits and save northerners hundreds of dollars a year in shipping costs.

Harper has made northern development a key part of his mandate, although critics point out that his promises exceed his achievements.

Completing a gravel-surfaced, all-weather road to the Arctic coast has been on the northern wish list since the 1960s, when local residents began pushing for it.

Harper credited former prime minister John Diefenbaker with the vision for the project.

"Prime Minister Diefenbaker knew then what our government is undertaking today: Constructing a highway will improve the lives of people living in the North for generations to come, facilitating economic development, creating jobs and enabling cost-effective, safe and reliable transportation of goods to and from northern communities," Harper said.

Studies on the project began in 1998 and the territorial government sat down with Ottawa over it a few years later. The wheels really began rolling in 2009, when CanNor — the federal economic development agency for the North — agreed to fund a project description for the road.

Ottawa promised to pay for half the $300-million project in the 2012 budget, a commitment that has since grown to $200 million. Environmental regulators recommended a year ago that the project move forward and work began earlier this winter on what will eventually become the highway's first 19 kilometres.

Once complete, the highway is expected to reduce shipping costs to Tuktoyaktuk for essentials such as groceries by about $1.5 million a year. That's the equivalent of $1,500 in savings for every man, woman and child in town.

Construction will create the equivalent of 1,000 jobs, with 40 permanent positions.

The lure of a road all the way to the Beaufort Sea is anticipated to boost northern tourism by an annual $2.7 million. And local people will get improved access to health care, education and job opportunities once they no longer have to depend on air links or ice roads.

Energy companies such as Shell Canada, which is active in the Mackenzie Delta, are also expected to benefit. While they will still need ice roads to their individual sites, an all-weather road will reduce their costs and make transportation more dependable.

Building the two-lane roadway will be full of technical challenges, including many stream crossings, at least eight bridges and preserving permafrost to keep the ground under the road from sinking.

Project engineers say they won't use the previously standard practice of cutting into surface layers and building them back up with fill. Instead, they will avoid cutting through those insulating layers and will instead blanket the entire roadway with a subsurface fabric.

Most of the work will take place in winter to inflict as little permafrost damage as possible.

The completed highway will be the second major upgrade to the N.W.T.'s transportation infrastructure. The Deh Cho Bridge, which opened in 2012, removed the need for ferries to cross the Mackenzie River south of Yellowknife.

But it won't be the end of the territory's ambitious agenda.

The N.W.T. is still seeking funding for an all-weather road down the Mackenzie Valley — an epic, 800-kilometre dream that would run from Wrigley to Inuvik through some of the most forbidding and remote terrain in Canada.

The total cost has been estimated at $1.7 billion. But the road is considered key to opening up the territory's mineral riches, boosting the nascent energy industry in the central N.W.T., and even reviving the stalled and long-awaited Mackenzie natural gas pipeline proposal.

Project descriptions for various sections of that road are being prepared by the territorial government and aboriginal groups.

"We'll take it one project at a time," Harper said when asked Wednesday about funding for that road.

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